A bad time to be in government

Back in the early 1980s Sir Robert Muldoon used to grump that it was “not a good time to be in government” round the world because economies were in trouble. Now is also such a time. Or is there a silver lining?

Muldoon knew the political cost of a soggy economy: after a landslide win in 1975 his National party scored fewer votes than Labour in 1978 and 1981, staying in office only by dint of quirks in the voting system. By 1984 the economy was in such serious trouble — partly because he had administered the wrong medicine — that, rather than try to write a budget, he called an early election, which he lost in a landslide.

Muldoon’s fate was classic pocketbook politics. When the economy is down there is a greater likelihood a government will be ousted than when it is up — all other things being equal. (Muldoon in fact added to his own problem by creating enemies with a pugnacious political style.)

Right now in the United States, where house prices have plummeted, jobs are disappearing and consumer spending is retreating, Republican John McCain is struggling against Democrat Barack Obama in the November 4 presidential election because the Administration presiding over this slide is Republican. Republican strategists expect to lose six to eight seats in the Senate and a commensurate number in the House of Representatives.

In Canada Prime Minister Stephen Harper’s minority Conservative government’s bid for a majority in an election on October 14 is foundering on the slowing economy and international fears about the fallout from the credit crunch. Polls have the Conservatives around 35 per cent (lower in some polls) falling and the main opposition Liberal party rising, including notably among those saying the economy is affecting their vote.

Here the economic tailwind Helen Clark had behind her in 2005 has turned into a stiffish headwind, with fears of a gale.

It is not a good time to be in government and going for re-election.

Turn back the clock. In 1928 a Reform government headed by one of the most able politicians of the time, Gordon Coates, crashed from 47 per cent of the vote and a 20-seat majority in the 1925 election to 35 per cent and out of office. Through 1927 and 1928 the economy had been in trouble and unemployment was high.

By October 1931 recession was turning into depression after the United States stockmarket collapse in October 1929 and Coates was back in office in a coalition with the United party which had taken over the government from him.

In an election in December 1931 the Coalition was mandated to continue running the economy. It won 55 per cent of the vote and a large parliamentary majority. That was 10 per cent below the combined vote of its components in 1928 but some fall would have been logical as a result of combining two parties.

This is the sort of reaction some in Labour have been hoping for on November 8: nervous electors rethinking their flirtation with new-boy John Key and contemplating returning to the woman they might not like but know to be a tough manager.

But the stick-with-the-devil-you-know pitch doesn’t seem to be working for Gordon Brown, whose Labour party has been in office 12 years, for all of which until he became Prime Minister he was Michael Cullen’s equivalent. Brown’s opponent, Conservative leader David Cameron, who is preaching the politics of austerity (Key did a pale version after the fiscal figures release on October 6), dismisses “experience” as “the excuse of the incumbent”.

Moreover, there are important differences between 2008 and 1931. In 1931 changing the government would have meant betting on a Labour party which had never been in office and still preached a vigorous brand of democratic socialism. That was a very different proposition from the option now of switching to the National party, which has been in office 38 of the past 60 years. (Though it does have as leader a relative novice in parliamentary experience.)

In 1931 Labour had just for the first time become the only major opposition party. It did lift its vote share to 34 per cent from 26 per cent in 1928. That — plus a change of leader to Michael Joseph Savage, a less forbidding figure than Harry Holland — was a springboard for its landslide win in 1935 in reaction to the Coalition’s tough cost-cutting policies which compounded the depression and produced the “sugarbag years” of penury and degrading treatment of men on unemployment “relief”. But the turn towards Labour was in the future.

A second difference with 1931 is that whereas then the depression was beginning to bite and so was a matter of personal experience, which might have triggered a devil-you-know reaction among some voters, for the great majority of today’s voters the current international meltdown is still mainly offshore, the stuff of scary headlines and excited media buzz rather than personal experience.

Unemployment, while beginning to rise, is only 4 per cent. Households are squeezed by high fuel and food prices, rent and interest rates but they have had a palliative tax cut and can expect another one if they change the government lead-party. They are hurting — the so-called “misery index” is up — but not yet so badly as to trigger a devil-you-know flight back to Clark and Cullen. In fact, consumers have shucked some of their heavy winter pessimism in the past month.

Moreover, neither of the two major parties is proposing 1930s-type heavy cuts in government spending. Both explicitly say they will cut taxes and keep spending up to counter the recession. New Zealand First, the Greens and the Maori party want more, not less, government spending.

All this is reassuring to voters. But, since it doesn’t dispel all the squeeze, it leaves voters likely to react in classic pocketbook fashion (plus the other factors bearing down on this third-term government). The economic predicament is not — yet — so frightening that it might drive voters back to Clark and Cullen. It might instead firm their resolve to jump ship.

But there are still four weeks to election day. The international events of the past 10 days would make unconvincing fiction if they were not fact. This is a fast-moving bus and nobody knows the destination or how many people will be run over on the way. There is possibly time yet for people to get really scared and the devil-you-know syndrome to kick in.

But for the moment the Muldoon syndrome is in operation: that it is not a good time to be in government seeking re-election. It might also be not a good time for the government after the election.